Financial Accounting and Cost Accounting

Time allowed – 3 hours Maximum marks – 100

[N.B. – The figures in the margin indicate full marks. Questions must be answered in English. Examiner will take

account of the quality of language and of the way in which the answers are presented. Separate answer scripts should be used for each section. Different parts, if any, of the same question must be answered in one place in order of sequence.]

Section I Marks 50

Marks 1. (a) What conditions need to be satisfied as per BAS for interest to be treated as revenue? 3 (b) What is the objective of BASs followed for (i) Borrowing cost (ii) Inventory (iii)

Property, Plant and Equipment? 6 2. Following are the Trial Balances of A Ltd. and its Rajshahi Branch as on December 31, 2007: 15

Head office (Tk.)

Rajshahi (Tk.)

Head office (Tk.)

Rajshahi (Tk.)

Stock on 1st Jan. 2007

45,000 16,400 Creditors 20,300 5,400

Purchases 110,000 25,600 Goods sent to Branch

14,400 -

Wages 80,800 13,100 Sales 330,200 69,900Manufacturing Exp 35,400 6,800 Head Office A/c - 28,000Machinery: Head office 100,000 -

Capital in Shares of Tk.10 each

200,000

-

Branch 50,000 - Discount earned 1,100 300Furniture: Head office 5,000 - Branch 2,000 - Purchase Returns 2,500 600Rent 6,000 3,400 Salaries 32,000 11,000 Debtors 38,000 8,000 General Expenses 18,000 4,000 Goods received from Head Office - 14,400

Cash in hand and at Bank 10,300 1,500

Branch Account 36,000 - 568,500 104,200 568,500 104,200

Closing Stock at head office was Tk.38,700 and at Rajshahi was Tk.28,700. Depreciation is to be allowed at 10% on machinery and at 15% on furniture. Rent still payable in respect of 2007 is Tk.300 (for Branch). Prepare the Trading and Profit and Loss Accounts, and the consolidated Balance Sheet.

3. Following have been extracted from the trial balance of Commercial Banks Ltd. as at 31

December, 2007: Tk. Tk. Bills discounted 12,36,00,000 Rebate on bills discounted (31.12.2007) 17,53,000 Discount received 62,65,000

Following have been revealed upon further analysis of the bills discounted:

Amount of bills Due dates Rate of discount Tk. % 27,50,000 31.12.07 6.5 73,00,000 06.03.08 6 4,18,00,000 15.03.08 5 2,19,00,000 18.06.08 6.5

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You are required to pass appropriate journal entries for the above and show how the relevant items will appear in the Profit and Loss Account of the bank for the year to 31 December, 2007 and in its Balance Sheet at 31 December, 2007. 10

You are further required to write appropriate but short note to the accounts stating the bank’s accounting policy on the items. 3

4. (a) Explain the terms, surrender value and paid up value used in life assurance business. Why

these can not be found in other insurance business? 4 (b) From the following figures appearing in the books of Fire Insurance Division of a General

Insurance Company, show the amount of claim as it would appear in its Revenue Account for the year ended 31 December, 2007. 9

Direct Business Re-insurance (Tk.(million) Tk.(million) Claims received during the year 500 600 Claims settled during the year 480 540 Claims payable – 1.1.2007 760 10 31.12.2007 812 5 Management expenses 8 Survey fee 3 Legal and professional 5

Section II Marks 50

1. (a) State what do you understand by the following terms used in a costing system: (1) Allocation (2) Apportionment and (3) Absorption. 3

(b) Your factory buys and uses a component for production at Taka 10 per piece. Annual requirement is 2000 pieces. Carrying cost of inventory is 10% per annum and ordering cost is Taka 40 per order. The Purchase Manager proposes that, as the ordering cost is very high, it is advantageous to place a single order for the entire annual requirement. He also says that, if we order 2,000 pieces at a time, we can get a 4% discount from the supplier. 5

Evaluate this proposal and make recommendation. 2. (a) Define Specific Order Costing and Operation costing with example. 2 (b) Distinguish between Purchase Order and Purchase Requisition. 2 (c) Miza Chemicals Ltd. obtain three joint products X, Y and Z from a process. Cost upto the

point of separation of the products for a particular period amounting to Tk.50,000. Other particulars are as follows: 6

Product No. of Units Units of raw material used X 700 200 Y 500 300 Z 300 500 1,500 1,000 Apportion the joint cost of Tk.50,000 to products X, Y and Z on the basis of (i) Physical

measurement (ii) Average unit cost. 3. (a) From the following particulars you are required to workout the earnings of a worker for a

week under (a) Straight Piece Rate (b) Differential Piece Rate (c) Helsey Premium Bonus Scheme (50% sharing) and (d) Rowan Premium Bonus Scheme: 6

Weekly working hours 48 Hourly wage rate Tk.7.50 Normal time taken per piece 20 minutes Normal output per week 120 pieces Actual output for the week 150 pieces Differential piece rate 80% of piece rate when output is below

normal and 120% of piece rate when output is at or above normal.

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(b) A manufacturing company provides you with the following information relating to Process

II for the month of April 2008:

a) Opening Work in Progress Nil b) Units introduced 10,000 units @Tk.5 per unit c) Expense charged to Process: Material Tk.19,500 Labour Tk.64,750 Overheads Tk.32,400 d) Normal loss in Process 1% of input e) Closing work in Progress 350 units Degree of completion: Materials 100% Labour & overheads 50% f) Finished output 9,500 units g) Degree of completion of abnormal loss Materials 100% Labour & overheads 80% h) Units scrapped as normal loss were sold Tk.Tk,2 per unit. i) All the units of abnormal loss were sold at Tk.3 per unit.

You are required to prepare: 12 (i) Statement of Equivalent Production (ii) Statement of cost (iii) Process II Account (iv) Abnormal Loss Account.

4. (a) Exim Ltd. A manufacturing company using a historical cost system and applies overhead

on the basis of predetermined rates. The following data available from the records of the company for the year ended March 31, 2008:

Taka Manufacturing Overheads 850,000 Manufacturing overheads applied 750,000 Work in Progress 240,000 Finished Goods Stock 480,000 Cost of Goods Sold 1,68,000

Apply different methods for disposal of unabsorbed overheads showing the implications of each method on the profits of the company. 6

(b) A transport service company is running five buses between two towns which are 50

kilometer apart. Seating capacity of each bus is 50 passengers. The following particulars were obtained from their books for the month of April 2008:

Taka Wages of Drivers, Conductors and Cleaners 24,000 Salaries of Office Staff 10,000 Diesel Oil and other oil 35,000 Repair and Maintenance 8,000 Taxation, Insurance etc. 16,000 Depreciation 26,000 Interest and other expenses 20,000 139,000

Actually passengers carried were 75% of seating capacity. All buses run on all days of the month. Each bus made one round trip per day. Find out the cost per passenger – kilometer. 8

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